Industrial Ouptut: 1% Annual Growth

Federal Reserve--Industrial production fell 0.5% in February after having increased 0.1% in January. Much of the decrease in February resulted from a weather-related drop of 3.7% in the output of utilities. In the manufacturing sector, output decreased 0.2% in February, and declines were fairly widespread across industries. The output of mines moved up 0.4%. At 113.7 percent of its 2002 average, total industrial production was 1.0% above its year-earlier level (see chart above).

Comment: At 1% annual growth, industrial output is certainly slowing but still does not necessarily suggest we have entered a recession. Notice on the chart above that annual growth in industrial output was significantly negative during the 2001 recession, and was about -2% as the recession started. We are not close to that kind of negative growth yet in output. Notice also the slowdown in industrial production growth to zero and negative growth in mid-2003 and subsequent recovery, without recession.